Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs
1997 (English)Report (Other academic)
Government budget balance forces the endogenous use of distortionarytax instruments when an exogenous reform is implemented. The aggregate efficiency of such reforms is based on comparisons of simple summary measures of the Marginal Cost of Funds of the various tariff or quota changes with theMarginal Cost of Funds of the alternative taxes, or of the Marginal Benefit ofGovernment supplied goods. The aggregate efficiency of tariff liberalization is dubious, while quota liberalization is more likely to be efficient. Social welfare rises with aggregate efficiency unless distribution effects are perverse. Plausible sufficient conditions for non-perverse distributional effects are provided. The results frame a diagnostic method for sensitivity analysis in evaluations of trade and tax policies.
Place, publisher, year, edition, pages
Stockholm: Institute for International Economic Studies, Stockholm University , 1997. , 35 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769
IdentifiersURN: urn:nbn:se:su:diva-40989OAI: oai:DiVA.org:su-40989DiVA: diva2:327675